Indigo Vision is in the video surveillance market. Its main product Video Bridge provides full motion realtime video which they sell to end users via system integrators that set up full video surveillance systems for customers.
Last year the company reported a loss of $2.85m, after a loss of $3.3m the year before. This poor performance has taken its toll and the share price is now trading in deep value territory.
On the balance sheet Indigo Vision reported $24.4m of current assets. These consisted of £8.9m of inventory, $12.9m of receivables and $2.6m.
The company has no debt and the only liabilities are payables totalling $11m. Therefore the net current asset value is $13.4m or approximately £10m, equating to 134p per share. The shares were trading at 112p.
From the balance sheet position Indigo Vision looked very cheap, and with no debt and lots of liquid assets the margin of safety appears adequate.
The problem here is the size of the loss relative to the balance sheet. A £2.2m loss for a company valued at £9m is not insignificant, and it’s taking its toll on the companies cash balance which is down £2.9 from last year.
On the earnings front there are positive comments coming from the company. There was a recent overhaul of senior management and the board of directors and a new turnaround strategy has already been implemented. The aim of which is to break even in 2018.
Time will tell if that target is attainable, but at a 17% discount to net current assets the share price is already pricing in a great deal of pessimism, and therefore any turnaround in their fortunes should be rewarded quickly.
I purchased the shares in September at 110p. The share price hasn’t budged since, and currently sits around 114p.
Retail Value Investing 